Let’s explore the effective method for raising substantial funds quickly. (Pro tip: Share this with those interested in generative NFTs.)

Most people think of NFTs merely as “JPGs for purchase.” However, **generative* NFTs encompass much more. The image above illustrates that generative NFTs consist of thousands of similar images, each unique! This allows many individuals to participate in your project, ideally fostering a strong community. Let’s delve deeper into this concept.*

I present this article as a brief Q&A introduction to generative NFTs, distinct from traditional standalone NFTs.

Can a project genuinely raise millions overnight through NFTs?

Absolutely. Numerous NFT launches have achieved this, and I can personally vouch for it, having participated in several successful multi-million-dollar projects over the past year. My company adopted the slogan “We help mint millionaires!”™ only when it truly became a reality. We’ve successfully done this multiple times since. However, I should clarify that these new “millionaires” typically became executives of thriving, well-funded projects. (We have since updated our slogan to “Web3 Tech & Strategy Experts.”)

What exactly are “generative” NFTs?

A standard NFT (which many recognize) is simply a digital asset, like a JPG, that someone owns — perhaps a picture of your cat. On the other hand, generative NFTs are unique. Imagine drawing a cat adorned with a shirt, necklace, hat, and background. Instead of creating a single cat image, the artist generates numerous examples of each part—such as 10 fur colors, 10 shirts, 10 necklaces, 10 hats, and 10 backgrounds. A generative NFT coder (like Jim) combines these elements using a program to produce thousands of unique combinations, saving each as an individual image. With just 50 elements, you could create 100,000 distinct cat images! (Typically, artists create about 200 elements or more and often generate sets of 10,000.)

Is it only about cats?

Not at all! Generally, generative NFTs feature animals or characters. The most renowned generative NFT collection is the Bored Ape Yacht Club. Each ape NFT currently holds a value of approximately 100 ETH, translating to about $200,000 per ape at today’s low ETH prices! You can check OpenSea rankings for examples of various animals and characters represented. While most generative NFTs aren’t valued at $200k each, it’s common for them to fetch hundreds or thousands of dollars or more, depending on ETH’s fluctuating value. (Not all NFTs utilize ETH, but Ethereum is arguably the primary blockchain for NFTs.)

So, you create 10,000 character images and sell them all online?

Yes, that’s the plan. (This is precisely what my company assists NFT drop teams with. We develop the generative art, prepare the data files, write the smart contract for crypto sales and transfers, create the web application for purchasing with cryptocurrency, and guide teams through the entire process's technical and management aspects.)

How much capital does this raise?

Typically, a standard NFT drop can generate around 800 ETH, roughly $1 million currently (noting that ETH is experiencing a significant dip as I write this; often it exceeds $2 million). The total sales depend on the number of NFTs in the collection (usually 10,000, but it can vary) and the price of each (generally ranging from 0.07 to 0.1 ETH, with higher values reflecting greater utility, which I will explain below).

What happens next? Do NFT owners simply retire to the Bahamas?

Not quite. Technically, there are few rules. If that’s what you stated you’d do with the funds and your buyers are okay with it, then yes. However, generative NFT drops are usually launched as quick avenues for various real-world projects. These could encompass anything from funding startups, game development, charity initiatives, art projects, music ventures, or anything else you can imagine. As long as (1) you utilize the funds as promised and (2) your buyers appreciate your intended use of the funds, that’s what matters most to them. Naturally, they also enjoy possessing an attractive piece of unique digital art.

Community is crucial, right? It’s in your headline.

Absolutely. While generative NFTs present an exciting and viable route for rapid growth and significant funding, I’ve observed that the most successful projects prioritize the establishment of active, engaged, and positive communities. At their core, generative NFTs are fundamentally about building communities. If you can cultivate a thriving community, you gain a notable advantage in this sector, and I encourage you to explore generative NFTs for ongoing growth. [A special note: I recognize that I’m discussing funding during a period when the crypto market is plummeting, which may seem counterintuitive. However, it highlights the critical importance of community-building as part of NFT utility. These communities are the ones likely to endure and prosper. While many prices and values are currently down, which impacts the NFT landscape, that’s a separate discussion.]

Are generative NFT sets superior to single-art pieces?

They aren’t necessarily better; they are simply different and serve various applications and utilities. If your goal is to create and sell unique digital art, that’s fantastic. Many NFT collectors appreciate this, often referred to as “1/1 digital art” — meaning “one of one” or unique. However, if you envision a larger project or initiative that necessitates substantial funding and provides advantages for buyers, generative NFTs are an excellent option.

What do you mean by “provide benefits to buyers”?

I’m referring to utility, which encompasses various benefits, uses, and perks available to NFT holders. I recommend reading this article on NFT roadmaps for a deeper understanding of this topic.

How can I attract buyers for 10,000 NFTs?

That’s the challenge, isn’t it? Given the financial potential of generative NFTs, many want to jump on the bandwagon. However, only a limited number of people are willing to spend $200+ on a cat picture. Much of a generative NFT project’s success hinges on marketing. This can take various forms, depending on specific factors. If you have leverage—like being a recognized brand, celebrity, or influencer with an audience—it’s much easier than otherwise. Nonetheless, anyone can enter the space and start marketing. The quality of your art, the strength of your project, the growth of your community, and the effectiveness of your marketing all contribute to the likelihood of success. Marketing is a specialized field in the NFT realm and is a crucial aspect of planning a generative drop.

Why do most buyers invest?

They invest because they’re excited about the project. They might be fans of the team or brand behind it; they might love the artwork samples; they could appreciate the roadmap or proposed utility of the NFTs; they could enjoy the community they’ve found in your project’s social channels; they may believe the NFT will increase in value and view it as an investment; or they could be “flippers” looking to quickly profit by buying and then reselling. There are numerous reasons, including a general enthusiasm for the entire game.

What do you mean by “game”? Is there more to this?

Yes, much more! When we generate a set of 10,000 NFT images from various parts, we don’t do this randomly. We utilize a rarity table to determine which parts are selected. For instance, if a cat can have 10 different shirts, you might assume each shirt has a 10% chance of selection, right? That’s not very exciting. Instead, we assign different probabilities to each item. Some may appear only 1% of the time, while others could show up 15% of the time. This article explains rarity tables. When we run 10,000 iterations this way, with assigned rarities, we create diverse outcomes, with some NFTs featuring mostly common elements and others showcasing rare items, sometimes even multiple rare items. Ultimately, bots typically rank the NFTs from 1 to 10,000 based on rarity, with the rarest fetching significantly higher prices.

But I thought all NFTs sold for the same amount?

Yes, when people first purchase them, that’s correct. When individuals mint NFTs from a generative set, they are unaware of which NFT they will receive. It’s akin to buying a single collectible sports card—each with identical outer packaging (known as the “prereveal image”). Only after the minting is complete do all the “wrappers” get removed, a process called “reveal.” Here’s an article about that. This is when buyers can finally see which specific NFT they obtained. Some will be common, others rare, and some extremely rare.

So, all of those NFTs can be resold for more?

Yes, this is where secondary marketplaces come into play. The largest is OpenSea. On such platforms, you can view a specific collection and its NFTs. During the “prereveal” stage, all NFTs look identical—like 10,000 baseball card wrappers. Even in this stage, people can buy and sell NFTs in a set. Once the rares are identified, however, the rarest NFTs tend to command the highest prices. It’s important to note that the NFT team earns revenue not just from primary sales; they can also receive royalties from secondary market sales. Typically, royalties range from 5% to 7.5%, although they can be as low as 2.5% and as high as 10%. This means that with each sale from one NFT holder to another, the NFT owner’s wallet collects that percentage. Therefore, if a collection gains popularity and value, revenues can skyrocket over time, often exceeding initial minting revenues.

What are the common NFTs worth?

The lowest price among the 10,000 set is termed the floor price. This is the minimum price for purchasing one of the NFTs in the collection. Some people gauge success by a set’s floor price. If the floor price exceeds the mint price, it indicates that all who minted have seen their NFTs’ value increase. Sometimes this increase can be substantial. For instance, if an NFT mints for 0.08 ETH and the floor price rises to 0.24 ETH, each person who minted realizes a 300% profit (assuming they sell). However, this is just the floor price, and typically, few NFTs are listed at that price. Rarer items could command tens or hundreds of times more than the floor price, especially the “super rare 1/1s.”

“1/1s”? But I thought these were entirely generated?

Yes, most are typically generated. However, teams often include 1/1 artwork as ultimate prizes within the set. Here’s an article explaining how that works. These can be unique items, like a shirt that only one cat wears among 10,000. Alternatively, it might be a completely separate piece from the main artist—like a special cat in the artist’s style that complements the set but is not generated. These are usually considered the most coveted pieces in any collection and can fetch exorbitant prices when offered for sale.

Exciting! I have an idea for a generative NFT drop. How many people are needed to execute an NFT drop? How do I assemble a team?

“It takes a village,” as they say. You’ll need a skilled artist, and possibly investors, marketers, advisors, project managers, a social media team, a tech partner, and perhaps more. Here’s an article discussing that aspect.

What if I’m a celebrity or influencer interested in NFTs, but lack a team or plan?

I suggest starting with the article linked above. However, (shameless self-promotion) guiding individuals through the NFT landscape is precisely what my company, GenerativeNFTs.io, specializes in. We can help you assemble a team, oversee the project from inception to completion, provide advice on related matters, handle all technical aspects, and leverage our experience to enhance your project’s robustness and profitability. So, if you’re looking for an easy solution, feel free to email me at [email protected].

Jim Dee is an accomplished writer, developer, and multimedia creator based in Portland. Discover more about him, his ventures, books, and more at JPD3.com. Thank you for reading! Cat image courtesy of Midjourney AI.